My last working day at my previous company was on 7th Mar, 2021. Due to covid restrictions, I couldn't travel to my base location to return company assets. So my Full and final settlement was on hold.
Finally, I returned the company assets on 30th Sep, 2021 and I received Full and final settlement payment (Feb & Mar salary + leave encashment) on 27th Oct, 2021. Please confirm, "Should this Full and final settlement payment amount be counted as income in FY 20-21 or FY 21-22"? Thank you.
24 November 2021
As such it should be considered as salary income for FY 2020-21. But if in form 16 it is shown in FY 2021-22, then you have an option to declare it as per that. So, check form 16 and decide.
24 November 2021
Hi Sir, Thank you for the response. It is not present in the FY 20-21 Form 16 which I received in Jun, 21. They have not provided me updated Form 16 in Oct, 21. I am concerned because if this income shows up in FY 21-22 Form 16, it would attract lot more taxes. What is your take on this sir, should I ask my employer to get FY 20-21 Form 16 updated ? Thank you.
24 November 2021
That would be more advisable. But even if is declared in form 16 of next FY, you will be able to claim arrears relief u/s. 89(1) of IT act.
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